tag:blogger.com,1999:blog-34323687.post8690747724314255836..comments2024-03-28T12:22:11.704+00:00Comments on Macro Man: Beware Bears Bearing MapsMacro Manhttp://www.blogger.com/profile/12324967552369915949noreply@blogger.comBlogger41125tag:blogger.com,1999:blog-34323687.post-23415820479409884122011-10-06T10:43:43.983+01:002011-10-06T10:43:43.983+01:00The thing that to me feels as though it's not ...The thing that to me feels as though it's not currently priced into equities is a Chinese (formal and informal) credit crunch, with accompanying slowdown in everything from construction to consumer goods.<br /><br />Now, I know from my track record that I am not the smart money in this region, or even in the two categories below (dumb money, mollusk money) - still I am worried that many of the things that have sold off the most are in the class "things people in China invest in".<br /><br />Was trying to get some indication from this:<br /><a href="http://www.sothebys.com/en/catalogues/ecatalogue.html/2011/ceramics-myt-hk0377#/r=/en/ecat.fhtml.HK0377.html+r.m=/en/ecat.list.HK0377.html/0/60/lotnum/asc/" rel="nofollow">Fancy mug sale</a><br /><br />...but since the results seem evenly divided between well over estimate, on estimate, and unsold, at most the results seem neither disastrous nor stellar.<br /><br />Any comment from someone closer, smarter, or both?Vasastannoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-21537497930791906652011-10-06T09:42:57.346+01:002011-10-06T09:42:57.346+01:00Thanks for the response Wilhelm!Thanks for the response Wilhelm!CVhttps://www.blogger.com/profile/16843402165210120665noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-4235079365393750152011-10-06T09:26:10.823+01:002011-10-06T09:26:10.823+01:00C says'
I have stated on more than one occasio...C says'<br />I have stated on more than one occasion that we have a market looking over it' shoulder.Elsewhere I labelled it the systemic event that hurt no one as an allusion to the fact that behaviourally huge numbers of people at already prepared and preempted it. Simply put looking back at 2008 is has mistaken as it is to look back at 1998 IF you think they are your guidelines for this market.There is allsorts of crap written about history repeating,harmonizing..blah blah blah.Sounds wonderful,but it's crap.There is no substitute to looking at the here and now.The here and now we are in and have been in for over a year is a seesaw of opposing goals setting off the needs of the bond markets that fund so much debt against those of the political class and there market arms who need to control factors such as growth etc etc. <br />We're swinging between the needs of the two which is why our markets have been so choppy and probably will stay that way for the foreeable future.The problem is the swings are of such magnitude they hurt to be on the wrong side of them.<br /><br />More recently we have a plunge that was a function of the preceding sideways market.A market that had not been so narrowly concentrated would have had a much more drift down feel to it .Instead the normal choppy moves were forgone for a plunge.That now puts' us in a qtr where we can argue that price has actually outstripped what we know from the economic data. Indeed we know that because central banks are still not seeing it the same way as price for one thing.<br /><br />At this juncture though the market got itself geared up for a move down based upon a key Euro date for Greek shot hits the fan.Dressed up ,but hold on the clubs shut the door until Novemeber and it's like a cinderella moment because the clock is also ticking doen that same week to rate decisions ...fooook cinderellas got to miss the ball and run for home...that's what the markets did this week and on some fronts they also managed to get themselves oversold in the immediate term on we all know what...or of you're safe haven you got overbought cinders'Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-88062152534405457842011-10-06T04:07:29.524+01:002011-10-06T04:07:29.524+01:00The relevance of past history should be debated by...The relevance of past history should be debated by first considering the ways in which the surrounding circumstances differed or were similar, as between the present and past history. My view is that the scale of the credit bubble today blows away all prior instances of the credit cycle, unless we go back to the '20's. Hence, the severity of the associated deleveraging will be greater, and of longer duration. In fact, the credit bubble is probably without modern historical precedent. Yes, we had loose lending standards, and an explosion in high yield/junk volumes. Those have happened before. But the world had never seen ABS, MBS, ABCP, CDO's and all of the other 1000:1 leveraging mechanics that were employed over the last 20 years. The required correction, which began in 2008, has been delayed and delayed, as sovereigns stuck their fingers in the dikes and (a) took on all of the existing risk themselves, and (b) then continued to added debt at the same velocity as would have happened the credit bubble continued expanding at its pre-08 rate, to prevent a liquidity implosion. You guys are losing the forest for the trees by getting bogged down in charting and attempting to interpolate macro conclusions from short run micro trends, IMHO.PPMnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-35152037045210663072011-10-06T04:04:57.402+01:002011-10-06T04:04:57.402+01:00I'm preparing to hedge myself for the possibil...I'm preparing to hedge myself for the possibility that markets behave in the manner you describe in this post, over the next 2-3 months; however, I've seen just as many comparisons to the 1998 market as I've seen to 2007/2008; My data set could be wrong.<br /><br />As a result, I don't think that "everyone" thinks this is 2008 for US equity markets.<br /><br />For those of us who fear of a 2007/2008 like equity markets (or something worse), we are more disturbed by the similar progression of events, such as short selling bans, politicians' rumors/denials, Bank CEOs claiming everything is OK, hedge fund redemptions, commodities correction, etc. Not to mention bank shares trading like pump n dump penny stocks.<br /><br />Hate to sound so cynical, but if I were long, I'd precisely want to perpetuate the myth that everyone thinks this is 2008 all over again. <br /><br />With all that said, everyone might think that everyone else thinks it's 2008 all over again, and therefore buy the dip.. and I'm ready to hedge myself to that self fulfilling, self reinforcing possibility.longshorttraderhttp://www.twitter.com/longshorttradernoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-74202632250468856892011-10-06T03:33:04.879+01:002011-10-06T03:33:04.879+01:00Mebane Faber had a nice graphic up charting depth ...Mebane Faber had a nice graphic up charting depth and length of bear markets. By any stretch this would be among the shortest and shallowest if it were to stop here. Of course this may presume it's own conclusion in a way, since if you define a bear market as down X percent, of course the day you hit it everything is worse by definition.<br /><br />Nonetheless credit drives the show and bank credit to end users is bound to contract. It is maybe too early to tell but maybe this is starting to show up - small business surveys are showing banks tightening again in the US. I would like to know about bank credit in Europe. Can anyone enlighten me?Chris of Stumptownnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-36637178599883978822011-10-06T03:20:26.188+01:002011-10-06T03:20:26.188+01:00Dee Dee H.,
excellent points all around.
The co...Dee Dee H.,<br />excellent points all around. <br /><br />The comments/debate are in very good form today. <br /><br />speaking of markets mispricing potential scenarios as highly probable, typically insightful John Kemp has some interesting thoughts on crde. <br /><a href="https://customers.reuters.com/community/newsletters/oil/InsideOil20111005.pdf" rel="nofollow">KempOnOil</a>willemnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-57874699027304447652011-10-06T02:19:36.567+01:002011-10-06T02:19:36.567+01:00Steve Jobs has died. We will not see his like agai...Steve Jobs has died. We will not see his like again.<br /><br />Thanks, Steve, not for the iPod, the iPad or the iPhone, which are brilliant, but for the Mac. A real game changer for users as varied as scientists and graphic artists. Jobs re-imagined the computer, and liberated us all from the hegemony of IBM and Wintel boxes.Leftbacknoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-83084304724377070122011-10-05T23:46:07.316+01:002011-10-05T23:46:07.316+01:00And "PPIP can't work", and "TAL...And "PPIP can't work", and "TALF is the act of a desperate man", and "what the hell does Bernanke think his little QE adventures are going to achieve" were all popular memes at the 2008/09 turn.<br /><br />Again, the point is not that we are heading to Dow 36000. But negativity IS everywhere, prices ARE low, and richly yielding fixed income in a world where the Bond is sub 3% ARE nice opportunities, if only for a quarter or two.Dee Dee Humbersidenoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-33557619421960455612011-10-05T23:34:31.207+01:002011-10-05T23:34:31.207+01:00Was it not a couple weeks ago we had this discussi...Was it not a couple weeks ago we had this discussion, wherein we all agreed, that when its up the political class to 'save' the real economy things are going to look pretty damn dicey? The fact that yesterday's rally took of on a rumor of a rumor of some sort of eurocrat action said it all. If you really want a sustained rally have Merkel say something positive and then shut her and every other politician up for 6 months.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-26033434971296909742011-10-05T22:57:29.633+01:002011-10-05T22:57:29.633+01:00Hands up any real economy small business type folk...Hands up any real economy small business type folk here then.<br /><br />Mine's up, and I mean real.ntwscnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-40723663261978668242011-10-05T22:46:56.852+01:002011-10-05T22:46:56.852+01:00JG I am typically early, and the Q1 2009 re-test w...JG I am typically early, and the Q1 2009 re-test was a major pain in the arse after we jumped the gun on Junker in late 2008. <br /><br />But my little shop "holds" stuff - if that ever makes sense in this day and age - so at some point, you have to turn the mute button and trust your bottom up guts. <br /><br />Just don't get too fancy with duration and you'll be more than fine at the 1-2Y horizon. If anything, for the inventory and buildup reasons mentioned above, I find it even more difficult today to imagine Corporate Armageddon (last time around, I could at least envision a chain of events that would blow up the 2007-style balance sheets. Not so much here).Dee Dee Humbersidenoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-79932312982926321632011-10-05T22:01:17.672+01:002011-10-05T22:01:17.672+01:00LB, Ahh wouldn't it be so simple if it was alw...LB, Ahh wouldn't it be so simple if it was always one long straight rack, but I concur only mushrooms and acid to guide players in this game. I'm long the USD waiting for a better entry into EUR before we go back to the LUF. Yes I'm waiting to go long Junker, for now its a short.JGhttps://www.blogger.com/profile/10512137319769585288noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-2154698403648443352011-10-05T21:40:45.166+01:002011-10-05T21:40:45.166+01:00No straight lines for sure in this business, JG in...No straight lines for sure in this business, JG in Luxy, except for those white ones on the mirror...Leftbacknoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-46701959589434446432011-10-05T21:32:14.132+01:002011-10-05T21:32:14.132+01:00LB
Battin - Luxembourg finest, if you ever find yo...LB<br />Battin - Luxembourg finest, if you ever find yourself in this jule of Europes crown or should I say eurocrat waystation - its my shout for sure!<br /><br />Don't think it's as simple as 1,2,3,4,5 there's a whole lot of flip side to those points. Your Q4 discounts falling sandles and black birds.<br /><br />JG sees a cascading paradox of swift down drafts and counter trend rallies mingled with fear of the flying sandle and occasional boot, but its the black bird that one must fear most...JGhttps://www.blogger.com/profile/10512137319769585288noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-58227382519817255962011-10-05T21:29:55.507+01:002011-10-05T21:29:55.507+01:00To Willem 7.21
It's true that real economy fo...To Willem 7.21<br /><br />It's true that real economy folks are likely (and rightfully) very cautious given the ongoing noise and pretty dire macro backdrop.<br /><br />But that argument itself has become quite consensus (you heard it a lot from the MSM in the debt ceiling debate, stuff like "how do you expect *job creators* to get on with it if everything else around them is a circus)<br /><br />This humble punter believes there is an interesting counterpoint to this, and it's that those guys were running pretty lean ships in the first place, and there is just not that much inventory/jobs/future capex to slash as a result of that. The downside is capped by the very fact that the upside was meh in the first place.<br /><br />I am not sure about equities, but US credit (HY esp.) and the pooled/tranched stuff is at some point going to respond to this. There simply wasn't the type of buildup you typically see entering into a recession for corporate defaults and/or housing & commercial real estate to experience a collapse to 2008 places. Ditto EPS (lower, but no crash), but I am sympathetic to the view that multiples may need to contract, hence a more wait and see approach there.<br /><br />2012 ... it's another story. But for now on, JNK and HYG it is. (and perhaps some IYR, but there are cleaner ways to play this from the secured bond side)Dee Dee Humbersidenoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-47017760609219050662011-10-05T21:15:43.368+01:002011-10-05T21:15:43.368+01:00Hehe looking good MacroMan ;)Hehe looking good MacroMan ;)Nichttps://www.blogger.com/profile/15083151714732237616noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-3764644218539482542011-10-05T21:10:58.279+01:002011-10-05T21:10:58.279+01:00Funny you should mention that, LB, I'm just ab...Funny you should mention that, LB, I'm just about to embark on my halfprice hardback of The Fear Index.<br /><br />Not my usual bedtime fodder, doncha know.ntwscnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-56704254390385516302011-10-05T21:01:20.155+01:002011-10-05T21:01:20.155+01:00JG must be drinking some impressive moonshine. Int...JG must be drinking some impressive moonshine. Interesting comment.<br /><br />At times like this, when the market is and has been dominated by FEAR of losses, LB ponders the way that market participants tend to forget the other kinds of FEAR.<br /><br />1) FEAR of being stuck in moribund fear trades.<br />2) FEAR of missing the big-ass rally.<br />3) FEAR of losing money in fear instruments.<br />4) FEAR of worthless put options and CDS.<br />5) FEAR of under-performance of one's benchmark.<br /><br />Just watch all of those come into play during Q4....! This isn't going to happen in a day, but once it begins it can be quite powerful.Leftbacknoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-87169280130867020792011-10-05T19:58:16.471+01:002011-10-05T19:58:16.471+01:00Can't can't c*nt't see it. 30% kickbac...Can't can't c*nt't see it. 30% kickback in yer face rally at this point? ok just because the dumb money can't see it either doesn't mean it's going to happen. Bottom is perhaps more live than dead ahead but it's still to be spanked. Junker, Skankel, Sokozy to be faded. I'm long BUNGA BUNGA bring back Gaddafi and leave Berlineupforsomeofmyactionsconi to fook alone. Reality is one big SHORT.JGhttps://www.blogger.com/profile/10512137319769585288noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-88196782404226196022011-10-05T19:21:52.065+01:002011-10-05T19:21:52.065+01:00Claus - re the pain trade, I think that positionin...Claus - re the pain trade, I think that positioning is such that many participants do not realize just how far the consensus has leaned to the bearish side. Yesterday being the perfect example, I think there is a massive constituency of players that are desperately wanting to get long risk assets on the slightest sign of positive news, this makes sense as with ZIRP and twist many don't have much a choice do they? How many times have we all heard lately "If the credit markets look better" "If the data improves" etc. etc. then we'll get long. My sense is this could easily drive the black swan move as referenced in this post.<br /><br />Per China, my boots are definitely not on the ground there but with food prices coming down in a big way, seems that inflation should be falling rapidly and easing of credit conditions could be much more palpable now, if needed to stem an unwanted collapse in the real economy driven by a (somewhat) wanted slowdown in r.e. development.<br /><br />Maybe the US is on the verge of recession, or maybe we're all just not used to the massive volatility in the data that comes with post financial crises fear that drives both investors and real economy folks/firms. The really ugly picture is being painted by the sentiment data, but should we expect anything different with the onslaught of bad news from debt ceiling to sovereign downgrades to EZ bailouts? If I were running any type of real economy small business and reading about all that is happening recently, you better believe that I would put off hiring/firing/expansion decisions for now. And i think THAT is exactly why this time IS different (although I cringe whilst typing that). We must know that psychology is much different now and thus the inputs to the cycle are different and the data outputs are going to be much different. the rules of the game have changed.<br /><br />As for market participants, in my view, the fact that we're so readily aware of those recent events specifically means that it is already 'priced in' per se. Not saying that things only look great from here, but i agree firmly with this post that blindly laying over charts and data to recent events is not the way to determine the most probable outcome from here.willemnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-13573573108641062002011-10-05T19:16:24.216+01:002011-10-05T19:16:24.216+01:00My simple thought was that 2008 would only repeat ...My simple thought was that 2008 would only repeat if and when all the people who got their hair burned off in 2008 are no longer around to apply the brakes tho those that were not around during 2008.<br /><br />Thanks for the hard work TMM. This is the first blog I open in morning, every morning.Marshall Junghttps://www.blogger.com/profile/01494663748081037987noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-45387600907830095952011-10-05T19:15:41.663+01:002011-10-05T19:15:41.663+01:00regarding the CDS and the 98 crisis, wasnt it conv...regarding the CDS and the 98 crisis, wasnt it conventional thinking at the time that russia would never defualt and devalue at the same time. thats politics in the east<br /><br />to say that china is default free, we you never do know. I would feel better writing CDS on Australia, US, Canada, UK etc. <br /><br />I still think a 2008 crash is possible, though not likely. Why? HFT and 100% correlations.abee crombiehttps://www.blogger.com/profile/13320039155613443039noreply@blogger.comtag:blogger.com,1999:blog-34323687.post-25590612732590386702011-10-05T18:45:55.876+01:002011-10-05T18:45:55.876+01:00Phenomenal post. Nothing unusual about post-crisi...Phenomenal post. Nothing unusual about post-crisis volatility in the data and participants swoon from panic to euphoria overreacting because of the all too familiar feeling of what happened in '08. That "observation" in and of itself greatly decreases the odds of a repeat of those outcomes.willemnoreply@blogger.comtag:blogger.com,1999:blog-34323687.post-4562550809165287742011-10-05T18:34:16.214+01:002011-10-05T18:34:16.214+01:00Bust A Move<a href="http://www.youtube.com/watch?v=tZQQGX24Teg&feature=relmfu" rel="nofollow"> Bust A Move </a>Leftbacknoreply@blogger.com